Mktg - Checkout counter becoming battleground for marketers

For a retailer, maximising every square inch of store space means more money to buffer the thin margins the business affords. So while shelves and aisles have traditionally been the revenue generating areas, a new space is emerging as a source of revenue for retailers — and as a battleground for marketers vying for customer attention.

It’s the cash till space, or the area near the cash counters in modern trade formats. From the time when checkout counters retailed purely ‘impulse purchase’ products like chocolates and candies, today the space near cash counters is overflowing with a plethora of brands, across categories. Soaps, shampoos, shaving products, movie DVDs, magazines, foods, beverages — it’s a free for all to grab the limited space around cash tills.

And while brands obviously stand to gain, it’s the retailers’ cash tills that have started ringing the loudest, with the space acquiring a ‘premium tag’ over other areas within the store.

“It’s a naïve and simplistic thing to say that the customer has only small change and only impulse purchases can happen here. If one can offer great deals and innovative pricing, a higher ticket size sale is possible,” says Damodar Mall, group customer director, Future Group, adding that formats within Future Group have sold products with unit prices of up to Rs 200 at the cash counter.

Hypercity in Mumbai clocks an average of 7,000 footfalls during weekdays, which rises manifold during the weekend. Ashutosh Chakradeo, business head – food & grocery, Hypercity, says all 25 POS (point of sales) in the format are being utilised to retail products in the food as well as general merchandise categories. “Cash point displays are used to retail products which are bought by customers on impulse.

CDs/DVDs, therefore, are a good option beside the usual range of food products. Also, the average price of these products is higher than the conventional food range retailed at cash tills,” says Chakradeo. A senior official at Reliance Footprint, the footwear format of Reliance Retail, says that even accessories like Hi-Design hand bags are being retailed near the cash counters of the format.

“During peak shopping hours, the waiting time can stretch to 15 minutes. So brands have realised that the area is now an important catchment inside the store,” he adds.

Fuelling this battle for POS space is the changing definition of impulse purchase, which has got brands normally not seen in this space fighting it out with traditional ‘impulse’ brands. Marico, for example, has used the checkout space for its functional foods brand, and Sameer Satpathy, head – marketing, Marico, believes that concept selling for such categories is necessary. “It has to be within arm’s reach of the customer to tempt her to pick it up,” he says. “And in the time to come, more brands will look at moving into the impulse purchase space. The trick is to try and provoke the consumer to pick it and drop it in the trolley.”

Sayan Guha, vicepresident, In-Store Consulting, adds that today, impulse purchase is no longer about low pricing, but more about indulgence. “From a small bar of chocolate to an expensive perfume, every brand is attempting to satiate indulgence. Also, the density of shoppers at the aisle is lesser compared to the traffic at the checkouts. So one is witnessing a mad rush,” he explains.

Brand marketers are realizing that smart innovations in display merchandising and price promotions fetch not only higher brand recall, but also drive higher offtakes. “You have captive eyeballs, so you can catch the customer’s undivided attention if you are well-merchandised at the check out counter. If she has missed the product at the category space, checkouts give you the second chance,” says Karunesh Bajaj, national head – modern trade, ITC.

Saying that the fight for checkout - counter space is fierce is putting it mildly. So, for instance, the manager of one beverage brand refused to share any information about the kind of initiatives the brand has undertaken with specific chains.

“It is with a great deal of effort that the key account sales team has been able to edge out other players from POS across various modern trade chains,” he remarks, candidly adding, “We don’t want to come across as aggressive to provoke the competition. Also, retailers may raise the price for POS space!” Not that the revenue potential of the space is lost on the retailers (See Box: Space Jam); they are the ones already dealing with brands making a bee-line for the limited area.

For that matter, Guha of In-store believes there’s an abundance of herd mentality here, and that brands are rushing to check-in at the checkouts without sparing a thought to optimisation. Bajaj of ITC, however, believes it’s a period of evolution of modern trade in India, and things will eventually acquire a sense of sanity.

Bajaj quotes a recent study in New York, which says that the typical supermarket does more business at its checkout stands than in its detergent aisles. “This space has become so important that retailers globally now consider this as a separate department, with its own category manager. In the Indian context, global retail entrants already have separate buyers for these locations, with whom we have to deal separately,” he states.

Some brands, though, appear to have looked at the science behind the effective leveraging of this space. One such example is the Frito-Lays display with the ‘Choose the Flavour Contest’ from its latest campaign featuring MS Dhoni and Saif Ali Khan. Guha observes that the thematic use of the campaign asking shoppers to pick the flavour from the bin placed near the POS was not only a good usage of space, it also helped in generating off-take for the flavours.

Similarly, Venkatesh Kini, VP – marketing, Coca-Cola India, refers to exclusive offers of discounts bundling different products from Coke India’s portfolio, which the company runs in specific modern trade chains. “The battle at POS factor becomes especially hot during weekends and during family holidays,” Kini says. He adds that the company has used customised out-of-home media, which add appeal to the POS points as well.

“Such initiatives have started forming part of beverage category management programmes. Racks with messages like ‘refreshment zone’ are put up next to the POS counters to make the proposition attractive to the customer,” explains Kini.

Given the popularity the space commands, retailers too have begun cashing in on checkouts to push their own labels and brands. Mall of Future Group states that by and large, this space is used by the group’s formats to pick the best in-house promotions on offer and pitch them near the tills. “It’s our reserve and we use it in the best possible way,” he states. Without citing numbers, Mall adds that the formats have successfully sold toys, combi deals in foods and even home linen.

If Future Group’s stance is one of using the space exclusively for store brands, players like Hypercity are looking to drive off-take by partnering with other brands. “It is mutually beneficial for both parties if we drive it together,” says Chakradeo.

Citing the instance of Cadbury Lite, which is targeted at health conscious customers, he says: “It did good business at the checkouts. We try and put products which are ‘impulse’ but have a higher recall.” Yet another instance was the introduction of Rite Cereal Bars, where the brand wanted space only in health food shelves. Chakradeo says that the team suggested placing the brand in bins near the checkouts. “It did good volumes considering it’s a new brand being launched in the market,” he explains.

Companies like ITC are working closely with modern trade players by sharing studies and other information from across the world. Bajaj says that some of the trial generation activities for the personal care business have been jointly worked out with our modern trade partners keeping their consumer interests in mind.

“We approach new categories from a 360-degree consumer engagement model and some of these have been executed specifically near the cash tills,” he says.